Last week saw a shareholder furor over the combination of Bob Nardelli's recent compensation as CEO of Home Depot with the stock's performance since he assumed the helm.
According to the Wall Street Journal, Nardelli "has received more than $100MM in salary, bonuses and stock awards, plus millions of dollars more in stock options, while the share price of Home Depot has declined by 12% during the same period." On Thursday of last week, every company director, except Nardelli, skipped the Home Depot annual shareholder's meeting. And Nardelli declined to answer questions regarding his compensation, ending the meeting after only 30 minutes.
What struck me, though, is how similar Nardelli is to the other famous spawn of Jack Welch's GE tenure- current GE CEO Jeff Immelt.
I've pasted a Yahoo chart of the two companies' stock price performances over the last five years, compared with the S&P500. For more details about Immelt's compensation, see my post here, entitled "Rewarding Losers- GE," written this past March.
Look at how similar the Home Depot and GE stock price paths are. It's almost like they are in the same industry. But they're not. Their two shared attributes are that each is headed by a former candidate for CEO of GE, and each company has paid it's former GE senior exec (in Immelt's case, now GE CEO and Chairman) handsomely to underperform the S&P500.
Not a single long-serving, large-cap US CEO who was a senior executive at Welch's side at GE comes to my mind as successful at delivering consistently superior total returns for his shareholders.
What gives? Is this perhaps the real legacy of "Neutron Jack" Welch? To teach his lieutenants how to run mediocre companies while being egregiously overpaid relative to the value built...err..make that destroyed?
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